Lincoln ordered to mediate FIA illustration lawsuit filed by former agent

A Texas judge ordered Lincoln Financial and nine plaintiffs suing over fixed indexed annuity performance to agree on a mediator by July 11.

The parties are to name a mediator, or state that they cannot agree on one, by that date, according to an order Tuesday by U.S. District Judge Ed Kinkeade. The judge closed the case until he rules on motions to dismiss.

"The parties shall mediate this case by April 5, 2024," Kinkeade wrote.

The nine plaintiffs – including an ex-Lincoln agent – allege that the insurer misrepresented the potential returns with its OptiBlend fixed indexed annuity. They seek class-action status in a lawsuit filed in the Northern District of Texas.

Former agent Henry Morgan and eight other plaintiffs, all Morgan's clients, signed FIA contracts in February 2020, court documents say. Plaintiffs say Lincoln led them to expect the consistent 6% gains illustrations showed.

The two sides recently opened settlement talks, a move encouraged by the court. While the judge agreed to a timeline that ends with a trial date of April 7, 2025, the parties agreed to hold that schedule in abeyance for now, the judge's order stated.

"Nothing in this Order shall be considered a dismissal or disposition of this case, and should further proceedings become necessary or desirable, any party or the Court may initiate such further proceedings in the same manner as if this Order had not been entered," Kinkeade wrote.

'Not sure use with the public'

The lawsuit claims a Lincoln marketing consultant "made several oral representations to Henry Morgan and, on information and belief, made the same misrepresentations to other brokers, agents and customers, that when the market was no longer in the bull direction a return would still be generated because of the dividend stock mix in the index."

In its response, Lincoln claimed the marketing information referenced in the lawsuit was emailed to Morgan and other Lincoln agents and marked, “For agent use only. Not for use with the public.”

"Thus, the alleged misrepresentations are not actionable," Lincoln attorneys wrote. "For the same reason, the oral representations ... allegedly made to Morgan, other agents, and brokers are not actionable."

Lincoln noted that all of the plaintiffs signed an application in which he or she acknowledged that “all payments and values provided by the contract, when based on experience of the index Account, are not guaranteed as a dollar amount.” Also, the Annuity Disclosure Statement, which each Plaintiff acknowledged reading, stated that if the “percentage change [was] negative” for the AIM Index, there “w[ould] not be any interest credited for the term.”

InsuranceNewsNet Senior Editor John Hilton covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.